JUBAIL, 24 March 2004 — The present steel shortage is a global phenomenon and the situation is unlikely to improve for the next two years, according to Muhammad Saleh Al-Jabr, chairman of Saudi Iron and Steel Company (Hadeed), an affiliate of SABIC.
The Hadeed chief called on steel manufacturers in the Kingdom to stop exporting steel in order to meet the domestic requirement and prevent a black market from emerging.
Of nearly four million tons of steel Saudi Arabia produces annually, three million tons are produced by Hadeed and another million by other four steel factories in the private sector. Ninety percent of Hadeed production goes to the local market and the rest goes to the GCC and international market.
Al-Jabr said that Hadeed in cooperation with private sector steel industries has commissioned a study to get to the bottom of the steel problem.
The basic cause has increased world consumption, he said. “China alone consumes 28 percent of the global steel production,” he said. The United States has now had to open the doors for imports and as a result many large steel manufacturers are selling their products to the US, he said.
Russia and Ukraine earlier sold their steel products in the international market but recently stopped exports in order to meet their own domestic demand, which also contributed to the international shortfall.
He said international demand for steel went up by nearly 19 percent primarily due to large construction projects.
Steel prices mainly went up prices because of hike in shipping rates and the high cost of raw materials.
However, in Saudi Arabia the steel price is about SR300 per ton, which is lower than the international price. Al-Jabr denied media reports that Hadeed exports steel to Iraq and the United States. “Hadeed has not exported steel to Iraq for 15 years,” he said.
Domestic demand for steel was continuously increasing. Hadeed is launching a new production facility with initial production of 500 tons annually, which will ease the pressure a little, he said. However the best way to meet the shortage was to stop export, he added.
